"Today, I believe that the markets are over reacting again to limited news from an earnings report and pushing the price up too much," he wrote. "As an investor who was lucky enough to buy last August, because the stock was trading below my estimate of its intrinsic value, I have to be consistent and sell, if the opposite holds now."

Damodaran is a seller.

But he warns against going short the stock.

"Should you sell short? I personally would not, since it is entirely possible that the momentum game that was so firmly against Facebook last year might work in the other direction now," he added. "There may be investors who will be drawn in to the stock if it crests the $38 IPO price, though there is really no economic or value significance around the number."

For those keeping score, Damodaran has updated his models, and he currently estimates Facebook's intrinsic value is $27.65 per share.